Why Retail Media and CTV Are Set to Have a Very Happy 2023
For an advertiser looking for real-time conversions on its ads, retail media is nothing short of magic.
Retail media ads connect impressions directly to purchases. You can see exactly how many people saw your ad and then completed a transaction. No other ad medium comes close.
With retail media, brands can reach tens of millions of shoppers per week at the exact time they’re interested in buying a product. That's scale and precision that linear TV rarely achieves anymore. And for media buyers, the inventory in retail media is largely addressable; informed by highly valuable, unique shopper insights.
No traditional media publisher has ever had that kind of power.
It's one of the many reasons why retailers in the U.S. are betting big on retail media’s advertising potential. The incredible success of Amazon.com hasn't been lost on retailers like Albertsons, Best Buy, CVS, Kroger, Lowe’s, Target, Ulta, Petco, Walgreens, Walmart and others — and they’re now creating retail media advertising networks to turn their sizable first-party e-commerce data caches into big online revenue. Even digital natives like Drizly, GoPuff, and Instacart are getting in on the action. Retailers' vast collection of first-party data has very quickly made them premium and strategic partners for digital advertising.
It’s easy to see, then, why advertisers and agencies are onboard: A recent IAB study shows that 92 percent of advertisers and 74 percent of agencies are already partnering with retailers to reach consumers. U.S. retail media ad spending will hit $40 billion this year and global retail media spending was set to eclipse $110 billion in 2022. That amounts to 18 percent of global digital advertising and 11 percent of all advertising, period. By some estimates, retail media will be the biggest wave of digital advertising we’ve seen yet (after search and social), and we’ve barely scratched the surface of what’s possible.
The popularity of retail media networks at this moment in time isn't a coincidence. They’re arriving as other reliable conversion attributions are disappearing. Retailers know exactly what's in your shopping cart, what you bought last time you visited, what else you like to buy … and so much more. With that kind of information, brands don’t mind giving up cookies.
But the proof is in the results for advertisers. McKinsey reports that retail media delivers a three to five fold return on advertising spend. With that kind of return on investment, brands would be foolish not to make retail media a big part of their advertising portfolio.
To reach their full potential, however, retail media purveyors need premium formats.
And they’re already going there. For example, Walmart is expanding the reach of its ad inventory to Roku, Snapchat, and TikTok. Kroger (soon to be Kroger-Albertsons) is offering CTV inventory in its retail media mix. And more deals like this are on the way.
According to the most recent IAB Video Ad Spend report, buyers score CTV as 57 percent more effective than linear TV at delivering website/sales actions. CTV also lets buyers leverage data they can’t get from linear TV, including first-party brand data (65 percent), location data (61 percent), and shopping data (50 percent). Advertising for streaming increased 57 percent in 2021 to $15.2 billion and was projected to grow an additional 39 percent in 2022.
There's a very good reason for that growth: CTV is addressable and it’s the biggest screen in the house. Brands need to be there to camp out in consumers’ minds. Now, with retail media, they can also target ads precisely and personalize them — two things that are almost guaranteed to drive higher conversion rates.
Economic contraction supercharges the need to show tangible results. The good news is that retail media networks and CTV can deliver that in spades.
Amit Nigam is vice president of product at Beachfront, a convergent TV advertising platform.
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Amit Nigam is the vice president of product at Beachfront, where he's responsible for driving the vision and execution of the product road map for Beachfront and serves as the product lead for clients, prospects and partners. Before Beachfront, Amit was the Vice President of Product at Perion where he managed cross functional teams, driving product development and growth. Prior to Perion, Amit served as the senior vice president of product and partnerships at Eyeview, a video marketing technology startup.